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Coupang Raises Profit Forecast, Narrows Loss After Fee Hike

·2-min read

(Bloomberg) -- Coupang Inc., the South Korean e-commerce giant backed by SoftBank Group Corp., raised its earnings forecast for 2022 and narrowed its losses as higher monthly membership fees and improved operational efficiency helped boost profitability.

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The company now expects to make a profit before interest, tax, depreciation and amortization, compared with an earlier projection for a $400 million loss. Its second-quarter operating loss narrowed to $75 million, compared with a $514.9 million loss a year earlier. Total net revenue rose 12% to $5 billion in the period, while the number of active clients rose 5%.

The shares rose 6% in New York in extended trading.

The Seoul-based company has been trying for years to boost profitability in its core delivery business, most recently raising the monthly fee for its “Rocket Wow” service -- similar to Amazon.com Inc.’s Prime membership -- earlier this year. Founder and Chief Executive Officer Bom Kim has said the company’s expansion is helping profitability.

“We do expect benefits to continue to come from greater economies of scale, improved operational excellence and the growth of higher margin categories and services,” Kim said on a post-earnings conference call. “But as we’ve stressed, the rate of improvement will not be consistent. As a result, the efforts will materialize unevenly.”

Kim mentioned there are some disruptions in near term due to higher inflation as well as fuel costs. In the long-term, the company will try to achieve targets of 7% to 10% or higher adjusted EBITDA, he said.

Amazon topped expectations for the June quarter, helped by its cloud computing division as it faces inflationary pressures in transportation costs and merchandise. The e-commerce giant is lowering costs by reining in hiring, but it is pursuing acquisitions to develop new growth opportunities.

Coupang is also ramping up spending in entertainment and streaming content and on its food delivery service, as it searches for growth. It’s also preparing financial services such as installment loans, according to local media.

(Updates with CEO comments from fifth paragraph)

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